Lenders to pay $22M for foreclosures on military

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Two major U.S. lenders have agreed to pay more than $22 million to settle allegations that they improperly foreclosed on active-duty military without court orders, the Justice Department announced Thursday.

The agency said the money from the two settlements -- to be paid by a subsidiary of Bank of America Corporation and a subsidiary of Morgan Stanley -- will be used to set up funds for victims, ensure their credit histories are repaired, and pay any other service members who were wrongfully foreclosed on.

Among the states with properties in question include California, Oregon, Texas and Nevada. However, it's unclear if anyone in San Diego County was affected.

"We cannot allow the members of our military -- who have made great personal sacrifices on our behalf - to attempt to transition in civilian life only to find their credit ruined and their homes in danger because of their willingness to serve in the armed forces," said Thomas E. Perez, assistant attorney general of the Department of Justice.

In the first settlement, BAC Home Loans Servicing LP (once known as Countrywide Home Loans Servicing LP and now a unit of Bank of America) will pay $20 million in connection to allegations that the company foreclosed on about 160 service members between Jan. 2006 and May 2009 without court orders.

In the second settlement, Saxon Mortgage Services Inc., a unit of Morgan Stanley, has agreed to pay $2.35 million to settle allegations that the company foreclosed on 17 active military members between Jan. 2006 and June 2009 without court orders.

Both BAC and Saxon also has agreed to compensate any service members who were improperly foreclosed on from July 2009 to 2010.

The Department of Justice alleged that the banks violated the Servicemembers Civil Relief Act, "a law designed to ease financial burdens on service members during periods of military service," a definition from the federal government. The financial protections cover expenses including rent, security deposits and mortgages.

Active-duty members who think they may have been victims can call the banks at (800) 896-7743, with mailbox 6 for BAC (Countrywide,) or (800) 896-7743, with mailbox 995 for Saxon.